What's the Short Thesis is all about?The $150M RedKite Loan, which - as of now - would need to be payed back starting in July 1, 2018 in 10 installments quarterly, i.e. 10x $15M.
Having the current delay in production growth, this is a serious weakness being utilized by the short sellers like Muddy Waters.
However, company has the option to delay the principal payment for one more year:
"Asanko has the option until March 31, 2018 to extend the first principal repayment of the facility by an additional year to July 1, 2019. Asanko is currently in discussions with Red Kite regarding the possible refinancing of the debt facility to support its Project 5 Million growth plan, which includes the construction of an overland conveyor and bringing the large Esaase deposit into production."
Know that RedKite is also company's gold purchaser.
And that might be reason enough to assume they will survive the current downtime quite well,
rendering the current price depression temporatily and as a good opportunity to buy cheap.
Has it reached capitulation yet?
Possible, but we only know this in hindsight. However, tax loss selling might be over already.
For the 1st time since 11/9, stock has seen a sense of consolidation around $0.60 - $0.65 (USD)
for three days. RSI and MACD starting to curve up. Selling power seems to have dried out, even though sporadic short attacks persist to shake the stock.
The latter was obvious on 11/30 where just 200k shares were being dumped on AMEX and TSX in the last half hour, but on TSX THREE MILLION shares have been bought at the last minute.
This day, 11/30 - could have been the capitulation day, since the 3M purchase showed strong support at $0.61 (USD) or C$ 0.79 (CAD).
What would be needed to maintain levels and even breakout and recover some grounds?
This is no more about gold price per se, even though gold is expected to stay above $1300 in 2018.
Confidence of mining plan and the RedKite loan push back into 2019 should allows this stock to return to its appropriate levels, like $0.80 - $0.90 USD, C$1 - C$1.20 (CAD)
In the end, this is surely what RedKite & company are negotiating, both want success in this area.
The cheap price, assuming the positive turnaround as planned together with RedKite might be enought to get out of the current undervaluation.